Development of institutions, rule of law and European integration

Ostojić, Ivana M. and Maksimović, Marijana T. (2021) Development of institutions, rule of law and European integration. Knowledge - International Journal, 48 (1). pp. 219-224. ISSN 1857-923X eISSN 2545-4439

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Abstract

In less-developed society, as a rule, it is presented high unemployment rate, low rate of economic growth and development, and reform of that society and economy is noticeable. Thus, many institutional and structural changes are needed. Institutional changes highlight the reform of economic, political and social institutions, which should lead to the rule of law, economic stability and economic development. The paper will research inclusive (good) institutions that promote the rule of law, maximize efficiency and social welfare, but also extractive (bad) institutions that extract wealth from the majority of citizens and redistribute it to the minority. An efficient institutional framework supports sustainable economic growth, as evidenced by numerous studies confirming that countries with the rule of law achieve three times higher rates of economic growth. The development of good institutions is also important for the protection of natural resources and the limitation of their consumption. These institutions generally indicate what is allowed and what is forbidden in one society. They protect private property, ensure the equality of the contracting parties in the economic process and provide legal security to citizens. The paper will analyze the EU requirements that Serbia needs to fulfill, with special reference to the chapters related to the rule of law and competition. Recommendations for achieving the stability of the institutions that are a condition for EU accession will be presented. This is important because the interdependence of modern states and societies was pointed out in the domestic literature at the beginning of the eighth decade of the 20th century, and Serbia should not remain outside the course of that interdependence. Also, the great changes that followed at the end of the 20th century, but also those that are constantly happening, are the reason why Serbia needs to change and improve its economic performance, in order to be able to adapt to those changes. The fact is that the world is polarized to the developed north and the less-developed south, and the dominance of developed countries over undeveloped ones can become visible, as well as the dominance of multinational companies from developed countries. In this context, the right question is how much less developed countries themselves contribute to their own backwardness with outdated legal frameworks and weak institutions that become a limiting factor. In globalized and liberalized world, the role of the state has seemingly been shaken, but it is still very important. The importance is reflected in securing the best possible international economic position, stabilizing political power, but also playing an active role in the economic process. The impression was gained that at the beginning of the 21st century the state was re-sovereignty, it still survived. The state is the bearer of legal protection, directly responsible for economic growth, scientific and technological development, development of education and society.

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